Lancashire business leaders' plea to the Government to save the economy

Chancellor Rishi Sunak faces the biggest challenge since the end of the Second World War to kickstart the UK economy and Lancashire business leader Frank McKenna believes he must think big and be creative

Friday, 26th June 2020, 3:45 pm
Frank McKenna is a former deputy leader of Lancashire County Council and is CEO and group chairman of the Downtown in Business group.

There has been more following than leading from the government through the Covid-19 crisis thus far. They instructed the cancelling of sporting events after football clubs decided they were going to voluntarily postpone matches.

They closed educational establishments when parents stopped sending their kids to school. They reluctantly introduced lockdown as an increasing number of businesses took the decision to shut their offices and prepared for their staff to work from home.

This week, the Prime Minister announced a reduction in the social distancing rules, when most folk had stopped adhering to them following his advisor’s visit to Barnard Castle a month or so ago.

As Boris Johnson and his colleagues struggle to navigate a way out of lockdown and get the economy moving again, we can at least glean some comfort from the performance of his Chancellor Rishi Sunak who has made a Herculean effort to protect jobs and business with a whole range of measures including the furloughing of staff, bounce back loans and Coronavirus Business Interruption Loan Scheme.

However, managing a crisis and ending one are two very different things. Sunak must now present an economic statement next month that is big, bold and ballsy. He must think in terms of trillions rather than billions and deliver the most radical programme of financial initiatives that we have ever seen.

Despite the Chancellor’s actions, our economy has shrunk by 20 per cent - more than any other economic powerhouse. To reverse this and make a better fist of protecting jobs than we have of protecting lives, he must produce a stimulus package that looks ahead not to the next three months, or even the next three years, but three decades hence. What can we be doing now to secure Britain’s place at the top table of nations in 2050?

During lockdown, Downtown in Business (DIB) has been consulting with members, senior decision-makers and politicians to come up with a 30-step plan as to how we think the government should get our country back to business.

Among the solutions offered by DIB are tax breaks for business, including National Insurance and pension contribution holidays; an overhaul of employment law; zero VAT on services provided by the hospitality sector; business- led skills commissions at a regional level; and greater devolution of powers to mayors and combined authorities.

We face an explosion in unemployment. We need the government to enable the private sector to protect and where possible create jobs. Tax breaks for those who are taking on new starters would offer a positive incentive. Financial barriers to job creation must be removed.

An overhaul of employment law would also be welcome. We have seen a huge increase in vexatious tribunal cases since the abolition of claimant fees and we have witnessed employer costs spiral as a result. Since employment tribunal fees were abolished in July 2017, there has been an increase of more than 30,000 applicants- 121,075 compared to 109,685 the previous year.

Tellingly, the percentage of successful claims has fallen significantly. It is generally agreed young people are going to be the hardest hit and therefore we need big investment into a future jobs initiative and into skills and training. However, we would urge the government to enable devolved administrations to establish private sector-led commissions which can map out programmes that fit regional employment needs, rather than an over- provision of ‘traditional’ projects - training today’s workforce for yesterday’s jobs. We would equally argue the underspend of the apprenticeship levy held by the Treasury should be utilised to support this.

Shamefully, we suffer from having 19th century infrastructure in a 21st Century world. There may be a temptation for the government to kick its commitments to expensive projects into the long grass. That would be a huge mistake. The long overdue improvements to our railway network should be accelerated, with HS2 and Northern Powerhouse Rail confirmed. The aviation industry has been badly hit in recent months. The ambition to develop a new runway at Heathrow and to strengthen our regional hub airports should be part of building a post-Brexit, global Britain.

On transport investment, we would warn against a knee-jerk splurge of millions on new cycle lanes across the country. These are in danger of becoming expensive white elephants as the heatwave disappears, replaced by harsh reality as the cold, wet, windy and dark winter evenings set in. Instead, invest this cash into improving our dilapidated public transport and to subsidise motorists to switch from petrol vehicles to electric.

If the pandemic has shown anything, it is the reliance we now have on the internet. A fast rollout of 5G connectivity to all communities must be a spending priority if the UK is to maintain its position as a leader in the digital and technology space.

Finally, we would argue that in key areas, economic development and business support, planning, transport and infrastructure, additional powers should be given to elected mayors and combined authorities to deliver. The Covid-19 response at a local level has often proved to be far superior to the national response.

The task ahead is a big one. We need the government and the Chancellor to start to lead rather than follow from now on.

Frank McKenna is a former deputy leader of Lancashire County Council and is CEO and group chairman of the Downtown in Business group.​

To download a copy of DIBs Manifesto ‘Unlocking Enterprise & Entrepreneurship in the UK’ visit www.downtowninbusiness.com